2021 (5) TMI 36 - HC - VAT and Sales Tax

Levy of tax - manufacturing and sale of non-branded products - confectionery items - to be taxable @ 12% tax under residuary Entry No.40 of Part D of the first schedule of the TNGST Act - HELD THAT - The issue regarding the manufacturing and sale of non-branded products, which all are not registered under the Trade and Merchandise Marks Act, 1958, then 12% tax cannot be imposed. The said issue has already been decided by this Court in V.R.S. CONFECTIONERY VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE COMMERCIAL TAX OFFICER 2017 (11) TMI 1315 - MADRAS HIGH COURT where it was held that confectionery items have been specifically mentioned in entry item-4 (iii) of Part-B of first schedule of the TNGST Act taxable at 4%. In view of the fact that the writ petitions on hand are similar to the same, which was already decided by this Court, this Court is inclined to consider the writ petitions - It is held that petitioners are liable to be taxed only at 4%. If any excess tax amount is collected from the petitioners, the same shall be refunded/adjusted by following the procedures - petition allowed - decided in favor of petitioner.

Summary

Issues:
Quashing of orders imposing 12% tax under residuary Entry No.40 of TNGST Act for unbranded products.

Analysis:
The petitioners sought relief to quash orders imposing 12% tax on unbranded products. The counsel argued that as non-manufacturers of branded products, they are not liable for the tax. The issue of taxing non-branded products not registered under the Trade and Merchandise Marks Act at 12% was previously decided by the Court in a similar case. The Court analyzed the situation where confectionery items were packed with the producer's name but not a registered brand. The Court held that merely mentioning the producer's name does not constitute a brand or trademark. The Commissioner's clarification imposing 12% tax without a hearing was deemed unenforceable, leading to the quashing of the assessment order.

The Court noted that specific entries in the TNGST Act taxed confectionery items at 4%, making the 12% tax inappropriate. Even if considered bakery products, they would fall under a different specific entry, not the residuary one. Consequently, the writ petitions were allowed, and the impugned orders imposing 12% tax were quashed. The petitioners were held liable to be taxed at 4%, with any excess tax collected to be refunded or adjusted following procedures. No costs were awarded in this matter.